UNIT 1

MANAGEMENT THEORY AND PRACTICE

Module I

Concept and Nature of Management

Management is a universal phenomenon. It is a very popular and widely used
term. All organizations - business, political, cultural or social are involved in
management because it is the management which helps and directs the various
efforts towards a definite purpose. According to Harold Koontz, “Management
is an art of getting things done through and with the people in formally
organized groups. It is an art of creating an environment in which people can
perform and individuals and can co-operate towards attainment of group goals”.
According to F.W. Taylor, “Management is an art of knowing what to do, when
to do and see that it is done in the best and cheapest way”.
Management is a purposive activity. It is something that directs group efforts
towards the attainment of certain pre - determined goals. It is the process of
working with and through others to effectively achieve the goals of the
organization, by efficiently using limited resources in the changing world. Of
course, these goals may vary from one enterprise to another. E.g.: For one
enterprise it may be launching of new products by conducting market surveys
and for other it may be profit maximization by minimizing cost.
Management involves creating an internal environment: - It is the management
which puts into use the various factors of production. Therefore, it is the
responsibility of management to create such conditions which are conducive to
maximum efforts so that people are able to perform their task efficiently and
effectively. It includes ensuring availability of raw materials, determination of
wages and salaries, formulation of rules & regulations etc.
Therefore, we can say that good management includes both being effective and
efficient. Being effective means doing the appropriate task i.e, fitting the square
pegs in square holes and round pegs in round holes. Being efficient means doing
the task correctly, at least possible cost with minimum wastage of resources.

Meaning of management
Management is the process of planning and organising the resources and
activities of a business to achieve specific goals in the most effective and
efficient manner possible. Efficiency in management refers to the completion of
tasks correctly and at minimal costs. Effectiveness in management relates to the
completion of tasks within specific timelines to yield tangible results.

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Management is the act of getting people together to accomplish desired goals

and objectives using available resources efficiently and effectively. Since
organizations can be viewed as systems, management can also be defined as
human action, including design, to facilitate the production of useful outcomes
from a system. This view opens the opportunity to manage oneself, a pre-
requisite to attempting to manage others.

Management Definitions by the Management Scholars

It is very difficult to give a precise definition of the term 'management'.

Different scholars from different disciplines view and interpret management
from their own angles. The economists consider management as a resource like
land, labour, capital and organisation. The bureaucrats look upon it as a system
of authority to achieve business goals. The sociologists consider managers as a
part of the class elite in the society.

A'Management Is a distinct process consisting of planning, organising,

actuating and controlling; utilising in each both science and art, and followed
in order to accomplish pre-determined objectives."

George R Terry (1877 - 1955)

"Management is the art of getting things done through others and with formally
organised groups."

Harold Koontz (1909-1984)

Peter Ferdinand Drucker

(November 19, 1909 – November 11, 2005)

"Management may be defined as the process by means of which the purpose and
objectives of a particular human group are determined, clarified and
effectuated"

Management is a multipurpose organ that manage a business and manages

Managers and manages Workers and work.

"Management is the art of knowing what you want to do and then seeing that
they do it in the best and the cheapest may."

Frederick Winslow Taylor (March 20, 1856 – March 21, 1915)

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One popular definition is by Mary Parker Follett. Management, she says, is

the "art of getting things done through people."

Mary Parker Follett (3 September 1868 – 18 December 1933)

Definition of Management: The Management Process

Management functions include: Planning, organizing, staffing, leading or

directing, and controlling an organization (a group of one or more people or
entities) or effort for the purpose of accomplishing a goal.

There are several different resource types within management. Resourcing

encompasses the deployment and manipulation of:

 Human resources
 Financial resources
 Technological resources
 Natural resources


The Need for Management

The Purpose of Management

The purpose of management is to serve customers. Yet, if one looks through

most management books for a definition of management, 99.9 percent of the
time the word customer will not be mentioned. This is astonishing because
serving customers in order to obtain a profit is the crux of every business
organization. Equally remiss is the fact that most definitions of management
neatly filter out service in their descriptions of management.

Good managers constantly streamline their organizations toward making a sale.

In other words, good managers are needed to keep their organizations on track
by ensuring that everything that’s being done is ethically geared toward
providing what customers want. In this regard, a good manager is responsible
for reducing waste and ambiguity, keeping costs down, and motivating others to
do the same. In the same vein, good managers regularly take educated risks and
exercise good judgement (the basis of entrepreneurship). These risks include:

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 Trying new things;

 Successfully adjusting to constant change;
 Developing subordinates (good managers aren’t afraid of letting other
people shine and, in fact, they encourage it);
 Improving their own skills.

The Need for Management

Management in all business and organizational activities is the act of getting

people together to accomplish desired goals and objectives using available
resources efficiently and effectively. Since organizations can be viewed as
systems, management can also be defined as human action (including design) to
facilitate the production of useful outcomes from a system. Therefore,
management is needed in order to facilitate a coordinated effort toward the
accomplishment of the organization’s goals.

Since most managers are responsible for more work than one person can
normally perform, a good manager delegates and integrates his or her work (or
the work of others). A manager does this by acting as a clear channel of
communication within the business that he or she serves. Good management is
needed to inject motivation, creativity, discipline, and enthusiasm into areas in
which they either don’t exist or they’re not necessarily wanted.

The various functions of management are classified as:

 Planning
 Organizing
 Staffing
 Leading/Directing
 Controlling/Monitoring
 Motivation

Management is also responsible for the formation and implementation of

business policies and strategies.

Characteristics of management

Management is an activity concerned with guiding human and physical

resources such that organizational goals can be achieved. Nature of
management can be highlighted as: -

1. Management is Goal-Oriented: The success of any management

activity is assessed by its achievement of the predetermined goals or
objective. Management is a purposeful activity. It is a tool which helps

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use of human & physical resources to fulfill the pre-determined goals. For
example, the goal of an enterprise is maximum consumer satisfaction by
producing quality goods and at reasonable prices. This can be achieved
by employing efficient persons and making better use of scarce resources.
2. Management integrates Human, Physical and Financial
Resources: In an organization, human beings work with non-human
resources like machines. Materials, financial assets, buildings etc.
Management integrates human efforts to those resources. It brings
harmony among the human, physical and financial resources.
3. Management is Continuous: Management is an ongoing process. It
involves continuous handling of problems and issues. It is concerned with
identifying the problem and taking appropriate steps to solve it. E.g. the
target of a company is maximum production. For achieving this target
various policies have to be framed but this is not the end. Marketing and
Advertising is also to be done. For this policies have to be again framed.
Hence this is an ongoing process.
4. Management is all Pervasive: Management is required in all types of
organizations whether it is political, social, cultural or business because it
helps and directs various efforts towards a definite purpose. Thus clubs,
hospitals, political parties, colleges, hospitals, business firms all require
management. When ever more than one person is engaged in working for
a common goal, management is necessary. Whether it is a small business
firm which may be engaged in trading or a large firm like Tata Iron &
Steel, management is required everywhere irrespective of size or type of
activity.
5. Management is a Group Activity: Management is very much less
concerned with individual’s efforts. It is more concerned with groups. It
involves the use of group effort to achieve predetermined goal of
management of ABC & Co. is good refers to a group of persons
managing the enterprise.

Objectives of management

The main objectives of management are:

1. Getting Maximum Results with Minimum Efforts - The main

objective of management is to secure maximum outputs with minimum
efforts & resources. Management is basically concerned with thinking &
utilizing human, material & financial resources in such a manner that
would result in best combination. This combination results in reduction of
various costs.

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2. Increasing the Efficiency of factors of Production - Through proper

utilization of various factors of production, their efficiency can be
increased to a great extent which can be obtained by reducing spoilage,
wastages and breakage of all kinds, this in turn leads to saving of time,
effort and money which is essential for the growth & prosperity of the
enterprise.
3. Maximum Prosperity for Employer & Employees - Management
ensures smooth and coordinated functioning of the enterprise. This in turn
helps in providing maximum benefits to the employee in the shape of
good working condition, suitable wage system, incentive plans on the one
hand and higher profits to the employer on the other hand.
4. Human betterment & Social Justice - Management serves as a tool for
the upliftment as well as betterment of the society. Through increased
productivity & employment, management ensures better standards of
living for the society. It provides justice through its uniform policies.

Importance of management

1. It helps in Achieving Group Goals - It arranges the factors of

production, assembles and organizes the resources, integrates the
resources in effective manner to achieve goals. It directs group efforts
towards achievement of pre-determined goals. By defining objective of
organization clearly there would be no wastage of time, money and effort.
Management converts disorganized resources of men, machines, money
etc. into useful enterprise. These resources are coordinated, directed and
controlled in such a manner that enterprise work towards attainment of
goals.
2. Optimum Utilization of Resources - Management utilizes all the
physical & human resources productively. This leads to efficacy in
management. Management provides maximum utilization of scarce
resources by selecting its best possible alternate use in industry from out
of various uses. It makes use of experts, professional and these services
leads to use of their skills, knowledge, and proper utilization and avoids
wastage. If employees and machines are producing its maximum there is
no under employment of any resources.
3. Reduces Costs - It gets maximum results through minimum input by
proper planning and by using minimum input & getting maximum output.
Management uses physical, human and financial resources in such a
manner which results in best combination. This helps in cost reduction.
4. Establishes Sound Organization - No overlapping of efforts (smooth
and coordinated functions). To establish sound organizational structure is

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one of the objective of management which is in tune with objective of

organization and for fulfillment of this, it establishes effective authority
& responsibility relationship i.e. who is accountable to whom, who can
give instructions to whom, who are superiors & who are subordinates.
Management fills up various positions with right persons, having right
skills, training and qualification. All jobs should be cleared to everyone.
5. Establishes Equilibrium - It enables the organization to survive in
changing environment. It keeps in touch with the changing environment.
With the change is external environment, the initial co-ordination of
organization must be changed. So it adapts organization to changing
demand of market / changing needs of societies. It is responsible for
growth and survival of organization.
6. Essentials for Prosperity of Society - Efficient management leads to
better economical production which helps in turn to increase the welfare
of people. Good management makes a difficult task easier by avoiding
wastage of scarce resource. It improves standard of living. It increases the
profit which is beneficial to business and society will get maximum
output at minimum cost by creating employment opportunities which
generate income in hands. Organization comes with new products and
researches beneficial for society.

Levels of management

The term “Levels of Management’ refers to a line of demarcation between

various managerial positions in an organization. The number of levels in
management increases when the size of the business and work force increases
and vice versa. The level of management determines a chain of command, the
amount of authority & status enjoyed by any managerial position. The levels of
management can be classified in three broad categories:

1. Top level / Administrative level

2. Middle level / Executory
3. Low level / Supervisory / Operative / First-line managers

Managers at all these levels perform different functions. The role of managers at
all the three levels is discussed below:

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LEVELS OF MANAGEMENT
1. Top Level of Management

It consists of board of directors, chief executive or managing director.

The top management is the ultimate source of authority and it manages
goals and policies for an enterprise. It devotes more time on planning and
coordinating functions.
The role of the top management can be summarized as follows -

a. Top management lays down the objectives and broad policies of

the enterprise.
b. It issues necessary instructions for preparation of department
budgets, procedures, schedules etc.
c. It prepares strategic plans & policies for the enterprise.
d. It appoints the executive for middle level i.e. departmental
managers.
e. It controls & coordinates the activities of all the departments.
f. It is also responsible for maintaining a contact with the outside
world.
g. It provides guidance and direction.
h. The top management is also responsible towards the shareholders
for the performance of the enterprise.

2. Middle Level of Management

The branch managers and departmental managers constitute middle level.

They are responsible to the top management for the functioning of their
department. They devote more time to organizational and directional

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functions. In small organization, there is only one layer of middle level of

management but in big enterprises, there may be senior and junior middle
level management. Their role can be emphasized as -

a. They execute the plans of the organization in accordance with the

policies and directives of the top management.
b. They make plans for the sub-units of the organization.
c. They participate in employment & training of lower level
management.
d. They interpret and explain policies from top level management to
lower level.
e. They are responsible for coordinating the activities within the
division or department.
f. It also sends important reports and other important data to top level
management.
g. They evaluate performance of junior managers.
h. They are also responsible for inspiring lower level managers
towards better performance.

3. Lower Level of Management

Lower level is also known as supervisory / operative level of

management. It consists of supervisors, foreman, section officers,
superintendent etc. According to R.C. Davis, “Supervisory management
refers to those executives whose work has to be largely with personal
oversight and direction of operative employees”. In other words, they are
concerned with direction and controlling function of management. Their
activities include -

a. Assigning of jobs and tasks to various workers.

b. They guide and instruct workers for day to day activities.
c. They are responsible for the quality as well as quantity of
production.
d. They are also entrusted with the responsibility of maintaining good
relation in the organization.
e. They communicate workers problems, suggestions, and
recommendatory appeals etc to the higher level and higher level
goals and objectives to the workers.
f. They help to solve the grievances of the workers.
g. They supervise & guide the sub-ordinates.
h. They are responsible for providing training to the workers.

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i. They arrange necessary materials, machines, tools etc for getting

the things done.
j. They prepare periodical reports about the performance of the
workers.
k. They ensure discipline in the enterprise.
l. They motivate workers.
m. They are the image builders of the enterprise because they are in
direct contact with the workers.

Functions of management

Management has been described as a social process involving responsibility for

economical and effective planning & regulation of operation of an enterprise in
the fulfillment of given purposes. It is a dynamic process consisting of various
elements and activities. These activities are different from operative functions
like marketing, finance, purchase etc. Rather these activities are common to
each and every manger irrespective of his level or status.
Different experts have classified functions of management. According
to George & Jerry, “There are four fundamental functions of management i.e.
planning, organizing, actuating and controlling”.
According to Henry Fayol, “To manage is to forecast and plan, to organize, to
command, & to control”. Whereas Luther Gullick has given a keyword
’POSDCORB’ where P stands for Planning, O for Organizing, S for Staffing,
D for Directing, Co for Co-ordination, R for reporting & B for Budgeting. But
the most widely accepted are functions of management given by KOONTZ and
O’DONNEL i.e. Planning, Organizing, Staffing, Directing and Controlling.
For theoretical purposes, it may be convenient to separate the function of
management but practically these functions are overlapping in nature i.e. they
are highly inseparable. Each function blends into the other & each affects the
performance of others.

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1. Planning

It is the basic function of management. It deals with chalking out a future

course of action & deciding in advance the most appropriate course of
actions for achievement of pre-determined goals. According to
KOONTZ, “Planning is deciding in advance - what to do, when to do &
how to do. It bridges the gap from where we are & where we want to be”.
A plan is a future course of actions. It is an exercise in problem solving &
decision making. Planning is determination of courses of action to
achieve desired goals. Thus, planning is a systematic thinking about ways
& means for accomplishment of pre-determined goals. Planning is
necessary to ensure proper utilization of human & non-human resources.
It is all pervasive, it is an intellectual activity and it also helps in avoiding
confusion, uncertainties, risks, wastages etc.
2. Organizing

It is the process of bringing together physical, financial and human

resources and developing productive relationship amongst them for
achievement of organizational goals. According to Henry Fayol, “To
organize a business is to provide it with everything useful or its
functioning i.e. raw material, tools, capital and personnel’s”. To organize
a business involves determining & providing human and non-human
resources to the organizational structure. Organizing as a process
involves:

 Identification of activities.
 Classification of grouping of activities.
 Assignment of duties.

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 Delegation of authority and creation of responsibility.

 Coordinating authority and responsibility relationships.

1. Staffing

It is the function of manning the organization structure and keeping it

manned. Staffing has assumed greater importance in the recent years due
to advancement of technology, increase in size of business, complexity of
human behavior etc. The main purpose o staffing is to put right man on
right job i.e. square pegs in square holes and round pegs in round holes.
According to Kootz & O’Donell, “Managerial function of staffing
involves manning the organization structure through proper and effective
selection, appraisal & development of personnel to fill the roles designed
un the structure”. Staffing involves:

 Manpower Planning (estimating man power in terms of searching,

choose the person and giving the right place).
 Recruitment, Selection & Placement.
 Training & Development.
 Remuneration.
 Performance Appraisal.
 Promotions & Transfer.
2. Directing

It is that part of managerial function which actuates the organizational

methods to work efficiently for achievement of organizational purposes.
It is considered life-spark of the enterprise which sets it in motion the
action of people because planning, organizing and staffing are the mere
preparations for doing the work. Direction is that inert-personnel aspect
of management which deals directly with influencing, guiding,
supervising, motivating sub-ordinate for the achievement of
organizational goals. Direction has following elements:

1.
 Supervision
 Motivation
 Leadership
 Communication

Supervision- implies overseeing the work of subordinates by their

superiors. It is the act of watching & directing work & workers.

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Motivation- means inspiring, stimulating or encouraging the sub-

ordinates with zeal to work. Positive, negative, monetary, non-monetary
incentives may be used for this purpose.
Leadership- may be defined as a process by which manager guides and
influences the work of subordinates in desired direction.
Communications- is the process of passing information, experience,
opinion etc from one person to another. It is a bridge of understanding.
2. Controlling

It implies measurement of accomplishment against the standards and

correction of deviation if any to ensure achievement of organizational
goals. The purpose of controlling is to ensure that everything occurs in
conformities with the standards. An efficient system of control helps to
predict deviations before they actually occur. According to Theo
Haimann, “Controlling is the process of checking whether or not proper
progress is being made towards the objectives and goals and acting if
necessary, to correct any deviation”. According to Koontz & O’Donell
“Controlling is the measurement & correction of performance activities
of subordinates in order to make sure that the enterprise objectives and
plans desired to obtain them as being accomplished”. Therefore
controlling has following steps:

a. Establishment of standard performance.

b. Measurement of actual performance.
c. Comparison of actual performance with the standards and finding out
deviation if any.
d. Corrective action.

Management As A Science Or An Art,

Management as a Science
Science is a systematic body of knowledge pertaining to a specific field of study
that contains general facts which explains a phenomenon. It establishes cause
and effect relationship between two or more variables and underlines the
principles governing their relationship. These principles are developed through
scientific method of observation and verification through testing.
Science is characterized by following main features:

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1. Universally acceptance principles - Scientific principles represents

basic truth about a particular field of enquiry. These principles may be
applied in all situations, at all time & at all places. E.g. - law of
gravitation which can be applied in all countries irrespective of the time.

Management also contains some fundamental principles which can be

applied universally like the Principle of Unity of Command i.e. one man,
one boss. This principle is applicable to all type of organization - business
or non business.

2. Experimentation & Observation - Scientific principles are derived

through scientific investigation & researching i.e. they are based on logic.
E.g. the principle that earth goes round the sun has been scientifically
proved.

Management principles are also based on scientific enquiry &

observation and not only on the opinion of Henry Fayol. They have been
developed through experiments & practical experiences of large no. of
managers. E.g. it is observed that fair remuneration to personal helps in
creating a satisfied work force.

3. Cause & Effect Relationship - Principles of science lay down cause and
effect relationship between various variables. E.g. when metals are
heated, they are expanded. The cause is heating & result is expansion.

The same is true for management, therefore it also establishes cause and
effect relationship. E.g. lack of parity (balance) between authority &
responsibility will lead to ineffectiveness. If you know the cause i.e. lack
of balance, the effect can be ascertained easily i.e. in effectiveness.
Similarly if workers are given bonuses, fair wages they will work hard
but when not treated in fair and just manner, reduces productivity of
organization.

4. Test of Validity & Predictability - Validity of scientific principles can

be tested at any time or any number of times i.e. they stand the test of
time. Each time these tests will give same result. Moreover future events
can be predicted with reasonable accuracy by using scientific principles.
E.g. H2 & O2 will always give H2O.

Principles of management can also be tested for validity. E.g. principle of

unity of command can be tested by comparing two persons - one having
single boss and one having 2 bosses. The performance of 1st person will
be better than 2nd.

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It cannot be denied that management has a systematic body of knowledge but it

is not as exact as that of other physical sciences like biology, physics, and
chemistry etc. The main reason for the inexactness of science of management is
that it deals with human beings and it is very difficult to predict their behavior
accurately. Since it is a social process, therefore it falls in the area of social
sciences. It is a flexible science & that is why its theories and principles may
produce different results at different times and therefore it is a behavior science.
Ernest Dale has called it as a Soft Science.
Management as an Art
Art implies application of knowledge & skill to trying about desired results. An
art may be defined as personalized application of general theoretical principles
for achieving best possible results. Art has the following characters -

1. Practical Knowledge: Every art requires practical knowledge therefore

learning of theory is not sufficient. It is very important to know practical
application of theoretical principles. E.g. to become a good painter, the
person may not only be knowing different colour and brushes but
different designs, dimensions, situations etc to use them appropriately. A
manager can never be successful just by obtaining degree or diploma in
management; he must have also know how to apply various principles in
real situations by functioning in capacity of manager.
2. Personal Skill: Although theoretical base may be same for every artist,
but each one has his own style and approach towards his job. That is why
the level of success and quality of performance differs from one person to
another. E.g. there are several qualified painters but M.F. Hussain is
recognized for his style. Similarly management as an art is also
personalized. Every manager has his own way of managing things based
on his knowledge, experience and personality, that is why some managers
are known as good managers (like Aditya Birla, Rahul Bajaj) whereas
others as bad.
3. Creativity: Every artist has an element of creativity in line. That is why
he aims at producing something that has never existed before which
requires combination of intelligence & imagination. Management is also
creative in nature like any other art. It combines human and non-human
resources in useful way so as to achieve desired results. It tries to produce
sweet music by combining chords in an efficient manner.
4. Perfection through practice: Practice makes a man perfect. Every artist
becomes more and more proficient through constant practice. Similarly
managers learn through an art of trial and error initially but application of
management principles over the years makes them perfect in the job of
managing.

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5. Goal-Oriented: Every art is result oriented as it seeks to achieve

concrete results. In the same manner, management is also directed
towards accomplishment of pre-determined goals. Managers use various
resources like men, money, material, machinery & methods to promote
growth of an organization.

Thus, we can say that management is an art therefore it requires application of

certain principles rather it is an art of highest order because it deals with
moulding the attitude and behavior of people at work towards desired goals.
Management as both Science and Art

Management is both an art and a science. The above mentione d points clearly
reveals that management combines features of both science as well as art. It is
considered as a science because it has an organized body of knowledge which
contains certain universal truth. It is called an art because managing requires
certain skills which are personal possessions of managers. Science provides the
knowledge & art deals with the application of knowledge and skills.
A manager to be successful in his profession must acquire the knowledge of
science & the art of applying it. Therefore management is a judicious blend of
science as well as an art because it proves the principles and the way these
principles are applied is a matter of art. Science teaches to ’know’ and art
teaches to ’do’. E.g. a person cannot become a good singer unless he has
knowledge about various ragas & he also applies his personal skill in the art of
singing. Same way it is not sufficient for manager to first know the principles
but he must also apply them in solving various managerial problems that is why,
science and art are not mutually exclusive but they are complementary to each
other (like tea and biscuit, bread and butter etc.).
The old saying that “Manager are Born” has been rejected in favor of
“Managers are Made”. It has been aptly remarked that management is the oldest
of art and youngest of science. To conclude, we can say that science is the root
and art is the fruit.
Management As A Profession

Over a large few decades, factors such as growing size of business unit,
separation of ownership from management, growing competition etc have led to
an increased demand for professionally qualified managers. The task of
manager has been quite specialized. As a result of these developments the
management has reached a stage where everything is to be managed
professionally.

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A profession may be defined as an occupation that requires specialized

knowledge and intensive academic preparations to which entry is regulated by a
representative body. The essentials of a profession are:

1. Specialized Knowledge - A profession must have a systematic body of

knowledge that can be used for development of professionals. Every
professional must make deliberate efforts to acquire expertise in the
principles and techniques. Similarly a manager must have devotion and
involvement to acquire expertise in the science of management.
2.  Formal Education & Training - There are no. of institutes and
universities to impart education & training for a profession. No one can
practice a profession without going through a prescribed course. Many
institutes of management have been set up for imparting education and
training. For example, a CA cannot audit the A/C’s unless he has
acquired a degree or diploma for the same but no minimum qualifications
and a course of study has been prescribed for managers by law. For
example, MBA may be preferred but not necessary.
3.  Social Obligations - Profession is a source of livelihood but
professionals are primarily motivated by the desire to serve the society.
Their actions are influenced by social norms and values. Similarly a
manager is responsible not only to its owners but also to the society and
therefore he is expected to provide quality goods at reasonable prices to
the society.
4.  Code of Conduct - Members of a profession have to abide by a code
of conduct which contains certain rules and regulations, norms of
honesty, integrity and special ethics. A code of conduct is enforced by a
representative association to ensure self discipline among its members.
Any member violating the code of conduct can be punished and his
membership can be withdrawn. The AIMA has prescribed a code of
conduct for managers but it has no right to take legal action against any
manager who violates it.
5.  Representative Association - For the regulation of profession,
existance of a representative body is a must. For example, an institute of
Charted Accountants of India establishes and administers standards of
competence for the auditors but the AIMA however does not have any
statuary powers to regulate the activities of managers.

From above discussion, it is quite clear that management fulfills several

essentials of a profession, even then it is not a full fledged profession because: -

a. It does not restrict the entry in managerial jobs for account of one
standard or other.
b. No minimum qualifications have been prescribed for managers.

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c. No management association has the authority to grant a certificate of

practice to various managers.
d. All managers are supposed to abide by the code formulated by AIMA,
e. Competent education and training facilities do not exist.
f. Managers are responsible to many groups such as shareholders,
employees and society. A regulatory code may curtail their freedom.
g. Managers are known by their performance and not mere degrees.
h. The ultimate goal of business is to maximize profit and not social
welfare. That is why Haymes has rightly remarked, “The slogan for
management is becoming - ’He who serves best, also profits most’.”

Management as a Process

As a process, management refers to a series of inter-related functions. It is the

process by which management creates, operates and directs purposive
organization through systematic, coordinated and co-operated human efforts,
according to George R. Terry, “Management is a distinct process consisting of
planning, organizing, actuating and controlling, performed to determine and
accomplish stated objective by the use of human beings and other resources”.
As a process, management consists of three aspects:

1. Management is a social process - Since human factor is most important

among the other factors, therefore management is concerned with
developing relationship among people. It is the duty of management to
make interaction between people - productive and useful for obtaining
organizational goals.
2. Management is an integrating process - Management undertakes the
job of bringing together human physical and financial resources so as to
achieve organizational purpose. Therefore, is an important function to
bring harmony between various factors.
3. Management is a continuous process - It is a never ending process. It is
concerned with constantly identifying the problem and solving them by
taking adequate steps. It is an on-going process.

Management as an Activity

Like various other activities performed by human beings such as writing,

playing, eating, cooking etc, management is also an activity because a manager
is one who accomplishes the objectives by directing the efforts of others.
According to Koontz, “Management is what a manager does”. Management as
an activity includes -

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1. Informational activities - In the functioning of business enterprise, the

manager constantly has to receive and give information orally or in
written. A communication link has to be maintained with subordinates as
well as superiors for effective functioning of an enterprise.
2. Decisional activities - Practically all types of managerial activities are
based on one or the other types of decisions. Therefore, managers are
continuously involved in decisions of different kinds since the decision
made by one manager becomes the basis of action to be taken by other
managers. (E.g. Sales Manager is deciding the media & content of
advertising).
3. Inter-personal activities - Management involves achieving goals
through people. Therefore, managers have to interact with superiors as
well as the sub-ordinates. They must maintain good relations with them.
The inter-personal activities include with the sub-ordinates and taking
care of the problem. (E.g. Bonuses to be given to the sub-ordinates).

Management as a Discipline

Management as a discipline refers to that branch of knowledge which is

connected to study of principles & practices of basic administration. It specifies
certain code of conduct to be followed by the manager & also various methods
for managing resources efficiently.

Management as a discipline specifies certain code of conduct for managers &

indicates various methods of managing an enterprise. Management is a course
of study which is now formally being taught in the institutes and universities
after completing a prescribed course or by obtaining degree or diploma in
management, a person can get employment as a manager.

Any branch of knowledge that fulfils following two requirements is known as

discipline:

1. There must be scholars & thinkers who communicate relevant knowledge

through research and publications.
2. The knowledge should be formally imparted by education and training
programmes.

Since management satisfies both these problems, therefore it qualifies to be a

discipline. Though it is comparatively a new discipline but it is growing at a
faster pace.

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Management as a Group

Management as a group refers to all those persons who perform the task of
managing an enterprise. When we say that management of ABC & Co. is good,
we are referring to a group of people those who are managing. Thus as a group
technically speaking, management will include all managers from chief
executive to the first - line managers (lower-level managers). But in common
practice management includes only top management i.e. Chief Executive,
Chairman, General Manager, Board of Directors etc. In other words, those who
are concerned with making important decisions, these persons enjoy the
authorities to use resources to accomplish organizational objectives & also
responsibility to for their efficient utilization.

Management as a group may be looked upon in 2 different ways:

1. All managers taken together.

2. Only the top management

The interpretation depends upon the context in which these terms are used.
Broadly speaking, there are 3 types of managers -

1. Patrimonial / Family Manager: Those who have become managers by

virtue of their being owners or relatives of the owners of company.
2. Professional Managers: Those who have been appointed on account of
their specialized knowledge and degree.
3. Political Managers / Civil Servants: Those who manage public sector
undertakings.

Managers have become a part of elite group of society as they enjoy higher
standard of living in the society.

Management and Administration

According to Theo Haimann, “Administration means overall determination of

policies, setting of major objectives, the identification of general purposes and
laying down of broad programmes and projects”. It refers to the activities of
higher level. It lays down basic principles of the enterprise. According to
Newman, “Administration means guidance, leadership & control of the efforts
of the groups towards some common goals”.

Whereas, management involves conceiving, initiating and bringing together the

various elements; coordinating, actuating, integrating the diverse organizational
components while sustaining the viability of the organization towards some pre-

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determined goals. In other words, it is an art of getting things done through &
with the people in formally organized groups.

The difference between Management and Administration can be summarized

under 2 categories: -

1. Functions
2. Usage / Applicability

On the Basis of Functions: -

Basis Management Administration

Meaning Management is an art of getting It is concerned with

things done through others by formulation of broad
directing their efforts towards objectives, plans & policies.
achievement of pre-determined
goals.

Nature Management is an executing Administration is a decision-

function. making function.

Process Management decides who should as Administration decides what

it & how should he dot it. is to be done & when it is to
be done.

Function Management is a doing function Administration is a thinking

because managers get work done function because plans &
under their supervision. policies are determined under
it.

Skills Technical and Human skills Conceptual and Human skills

Level Middle & lower level function Top level function

On the Basis of Usage: -

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Basis Management Administration

Applicability It is applicable to business It is applicable to non-business

concerns i.e. profit-making concerns i.e. clubs, schools,
organization. hospitals etc.

Influence The management decisions The administration is influenced

are influenced by the values, by public opinion, govt.
opinions, beliefs & decisions policies, religious
of the managers. organizations, customs etc.

Status Management constitutes the Administration represents

employees of the owners of the enterprise who
organization who are paid earn return on their capital
remuneration (in the form of invested & profits in the form
salaries & wages). of dividend.

Practically, there is no difference between management & administration. Every

manager is concerned with both - administrative management function and
operative management function as shown in the figure. However, the managers
who are higher up in the hierarchy denote more time on administrative function
& the lower level denote more time on directing and controlling worker’s
performance i.e. management.

The Figure above clearly shows the degree of administration and management
performed by the different levels of management

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Definition of Coordination
Co-ordination is the unification, integration, synchronization of the efforts of
group members so as to provide unity of action in the pursuit of common goals.
It is a hidden force which binds all the other functions of management.
According to Mooney and Reelay, “Co-ordination is orderly arrangement of
group efforts to provide unity of action in the pursuit of common goals”.
According to Charles Worth, “Co-ordination is the integration of several parts
into an orderly hole to achieve the purpose of understanding”.
Management seeks to achieve co-ordination through its basic functions of
planning, organizing, staffing, directing and controlling. That is why, co-
ordination is not a separate function of management because achieving of
harmony between individuals efforts towards achievement of group goals is a
key to success of management. Co-ordination is the essence of management and
is implicit and inherent in all functions of management.
A manager can be compared to an orchestra conductor since both of them have
to create rhythm and unity in the activities of group members. Co-ordination is
an integral element or ingredient of all the managerial functions as discussed
below: -

a. Co-ordination through Planning - Planning facilitates co-ordination by

integrating the various plans through mutual discussion, exchange of
ideas. e.g. - co-ordination between finance budget and purchases budget.
b. Co-ordination through Organizing - Mooney considers co-ordination
as the very essence of organizing. In fact when a manager groups and
assigns various activities to subordinates, and when he creates
department’s co-ordination uppermost in his mind.
c. Co-ordination through Staffing - A manager should bear in mind that
the right no. of personnel in various positions with right type of education
and skills are taken which will ensure right men on the right job.
d. Co-ordination through Directing - The purpose of giving orders,
instructions & guidance to the subordinates is served only when there is a
harmony between superiors & subordinates.
e. Co-ordination through Controlling - Manager ensures that there should
be co-ordination between actual performance & standard performance to
achieve organizational goals.

From above discussion, we can very much affirm that co-ordination is the very
much essence of management. It is required in each & every function and at
each & every stage & therefore it cannot be separated.

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Coordination and Cooperation

Co-ordination is an orderly arrangement of efforts to provide unity of action in
the fulfillment of common objective whereas co-operation denotes collective
efforts of persons working in an enterprise voluntarily for the achievement of a
particular purpose. It is the willingness of individuals to help each other.
Co-ordination is an effort to integrate effectively energies of different groups
whereas co-operation is sort to achieve general objectives of business.
Though these two are synonymous but they are different as below:
Differences between Co-ordination and Co-operation

Basis Co-ordination Co-operation

Meaning It is an orderly arrangement It means mutual help willingly.

of group efforts in pursuit of
common goals.

Scope It is broader than co- It is termed as a part of co-

operation which includes as ordination.
well because it harmonizes
the group efforts.

Process The function of co- The functions of co-operation

ordination is performed by are prepared by persons at any
top management. level.

Requirements Co-ordination is required by Co-operation is emotional in

employees and departments nature because it depends on
at work irrespective of their the willingness of people
work. working together.

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Relationship It establishes formal and It establishes informal

informal relationships. relationship.

Freedom It is planned and entrusted It depends upon the sweet will

by the central authority & it of the individuals and therefore
is essential. it is not necessary.

Support It seeks wholehearted Co-operation without co-

support from various people ordination is fruitless &
working at various levels. therefore it may lead to
unbalanced developments.

Therefore, existence of co-operation may prove to be effective condition or

requisite for co-ordination. But it does not mean that co-ordination originates
automatically from the voluntary efforts of the group of members. It has to be
achieved through conscious & deliberate efforts of managers, therefore to
conclude we can say that co-operation without co-ordination has no fruit and
co-ordination without co-operation has no root.

Skills of a manager
Every industry, of course, has its specific knowledge. However, in addition to
this, the qualities that make an individual a good manager tend to be fairly
similar across industries. The following are 6 essential skills that managers need
to have in order to manage employees effectively and efficiently to get the best
from them.

 1. Good communication

Having good communication skills is probably the most important skill of all

for managers to have. Unless you can properly communicate with those you
supervise, the rest of the skills really won't matter. In numerous types of
management tasks, the most common and first thing that needs to be done is to
communicate your opinions, expectations and needs to others. You shouldn't be
a manager if you don't enjoy working with people. You also need to be able to
send others the right messages and make sure that they understand you. The

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type of power that you use for persuading others on your views is also very
important.

2. Good Organisation

Probably the second most important skill that you can have as a manager is the
ability to organise. You need to be able to come up with a plan and then
schedule, organise and follow it. This also involves understanding your
company's processes and rules as well as among individuals. You must be able
to predict what will happen and at what time.

3. Team Building

Good managers know how to keep their teams intact. The well being of team
members does not benefit from having competition within the team. However,
competition between teams can be very stimulating and healthy. If one of the
team members speeds ahead and leaves the rest of the members behind without
helping them, the team will most likely fail. A good manager will notice these
irregularities very easily. He or she will attempt to correct the situation through
having discussions with the team, mostly through listening to members. To a
great extent, a successful and healthy team relies on the trust between members
and with the manager. If a manager is able to build trust systematically, the
team members will feel much more committed and appreciated.

4. Leadership

It isn't enough to just listen to the problems of coworkers. A good manager

needs to solve these problems and prove that he or she is committed to the goals
of the team. It is also the manager's responsibility to define goals along with
team members and then assign responsibility to various team members clearly.
A good manager will have a clear vision in terms of the direction he or she
wants the team to be headed in. Team members need to be 'infected' with this
vision so that everyone is headed in the same direction.

5. Ability to Deal with Changes Effectively

Many managers are thoroughly familiar with the entire working process. This
allows them to do things in an almost automatic manner. A good manager is
adaptable and flexible. When faced with obstacles, he or she has the ability to
react quickly. Stress doesn't prevent the manager from making the right
decisions for the team and company.

6. Domain Knowledge

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Good managers have a thorough understanding of the process he or she is

managing, including the type of tasks that team members are performing and
how they are working. This skill isn't quite as important as the other ones are.
However, in some cases, not having it will mean that the manager and the team
don't ever work at maximum capacity or use all of their potentials due to a lack
of understanding of one another.

, Roles of a manager

10 Roles of Manager: Managerial Roles by Henry Mintzberg

Roles of Manager refers to the responsibilities of managerial position,
Mintzberg has defined the roles of managers to identify what managers do in
the organization. The role is defined as the behavior which is defined for
different positions.

Today we have discussed the topic Roles of a Manager in this article. We will
cover all important aspects related to the roles and responsibilities of a Manager
in an organization.

Managerial Roles by Henry Mintzberg

Managerial roles are well defined by Mintzberg in his book “The Nature of
Managerial Work”. This book dedicated to roles and characteristics of
managerial work, based on his doctoral thesis (study of five managers).

Henry Mintzberg is a management author and Professor at McGill University,

Canada. He has written more than 30 books and publications on Business and
Management. 

Mintzberg introduced some basics concepts of management that are known as

the Management Theory by Henry Mintzberg.

He identified organizational types, the basic structure of an organization, and

the role of the manager in an organization. 

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According to Mintzberg, the Roles of a manager refers to the expected behavior

of the occupant of a position – not all their behavior, but to what he does as the
occupant of that position. 

These roles of manager applicable to all type of managers whether he is product

manager, case manager, account manager, finance manager, nurse manager,
general manager, sales and marketing manager.

Roles of Manager

Managerial roles depend on the formal authority which is delegated to the

manager in an organization. The degree of authority determines his position and
different roles.

Mintzberg has pointed out that there are three broad categories of roles that a
manager performs in each category of roles. These three categories consist total
of 10 different roles of a manager.

The manager uses his managerial skills and other characteristics while

performing a particular role.

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The three main categories of roles of a manager are interpersonal,

informational, and decisional.

 Interpersonal Roles (Figurehead, Leader, Liaison)

 Informational Roles (Monitor, Disseminator, Spokesperson)
 Decisional Roles (Entrepreneur, Disturbance handler, Resource
allocator, Negotiator)

10 Roles of Manager are as follows;

1. Figurehead
2. Leader
3. Liaison
4. Monitor
5. Disseminator
6. Spokesperson
7. Entrepreneur
8. Disturbance Handler
9. Resource Allocator
10.Negotiator

Let’s discuss all these roles and responsibilities of managers according to their
categories one by one. 

Interpersonal Roles of Manager

The interpersonal role is all about interacting with people inside and outside the
organization.

There are three types of interpersonal roles of a manager in an organization;

 Figurehead role,
 Leader role
 Liaison role

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⦿ Figurehead

A manager plays a figurehead role when he performs activities such as

attending ceremonial functions which have symbolic nature. 

Sometimes managers greet visitors, attend social functions involving

employees, and handling out merit certificates and other awards to outstanding
employees. 

⦿ Leader 

The leader role of a manager involves leading and motivating his subordinates
for willing contribution. Managers perform leader roles when they perform
activities such as Hiring, Training, motivating, and guiding subordinates.

⦿ Liaison

In the Liaison role, the manager act as a mediator between the organization and
the outsider.

He serves as a connecting link between his units and organizational units, and
sometimes with people from the external environment.

Informational Roles of Manager

The informational role of a manager is like serving as a focal point for the
exchange of information. It includes communication, giving, and receiving
information, both within and outside the organization. Information is required at
every level in an organization to make decisions effective.

There are three types of informational roles of a manager in an organization.

 Monitor role
 Disseminator role
 Spokesperson role

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⦿ Monitor 

The manager seeks and receives information about those factors which affect
his activities. These factors may be within the organization as well as outside it.

By playing a monitor role, Managers gain an understanding of the Organization

and its environment. 

⦿ Disseminator

In the disseminator role, the manager transmits information to subordinates,

peers, and superiors within the Organization. 

The manager has to act as a disseminator and distributes the information to his
subordinates because they may not be in a position to collect it.

⦿ Spokesperson

In the spokesperson role, the manager represents his organization or unit while
interacting with outsiders. 

More precisely, the Spokesperson Speaks on behalf of the Organization and

transmits information on Organization plans, policies, and actions to outsiders.

Must Read ➜ Management by Objectives (MBO)

Decisional Roles of Manager

Decisional roles of a manager involve choosing the most appropriate and best
alternative out of the available ones so that the organization achieves its
objectives when the chosen alternative is put into action.

In his decisional roles, the Manager performs four different roles as follows;

 Entrepreneur role
 Disturbance handler role

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 Resource allocator role

 Negotiator role

⦿ Entrepreneur

Manager as an Entrepreneur role, take initiative and make changes or

improvements in the activities of the Organization. 

The manager assumes certain risk which is involved in terms of the outcomes of
action because these are affected by a variety of external factors. 

External factors are dynamic and change constantly. And manager is required to
bring suitable changes in the organizational processes to align these with the
requirement of the environment. 

⦿ Disturbance handler

As a role of disturbance handler, the manager has in charge and takes corrective
action when Organization faces unexpected crises.

The manager is required to tackle those forces and events which tend to disturb
the organizational equilibrium and normal functioning.

These forces and events may be strikes by Employees and the Trade/Labor
Union, shortage of raw material, employee complaints and grievances, etc. 

⦿ Resource allocator

A manager as the resource allocator role must divide work and delegate
authority among his subordinates. He must decide who will get what work.

The manager allocates resources such as human, physical and financial among
his subordinates.

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⦿ Negotiator

the manager represents the organization in bargaining and negotiations with

outsiders as well as insiders.

In the negotiator role, the manager negotiates with various interest groups in the
organization. Such interest groups are shareholders, employees, and outside
agencies.

Must Read ➜ Steps in Planning Process

Validity of Role Approach

Mintzberg’s role approach is based on the close observation of the activities

performed by five chief executives. Therefore, the question arises of its validity
so far as managerial activities are concerned.

Though some research studies have supported the views of Mintzberg, this
approach suffers from two illustrations.

First, the type of roles that have been identified by Mintzberg is not applicable
to all types of managers particularly those at the lower levels.

Second, there are many other managerial roles that have not been included in
this list, for example, manager as a controller, as a coordinator, nevertheless,
Mintzberg has given a new insight into what managers do.

Reconciling Managerial Roles and Functions

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Management functions and roles do not exist opposite to each other but there
are two ways of interpreting what managers do. Most of the managerial roles
prescribed by Mintzberg can be integrated with the earlier classification
of management functions.

The key points of reconciliation between function and role approaches of

managerial jobs are as follows –

In planning, a manager performs informational and decisional roles as he

collects various relevant information on the basis of which he makes decisions.

In Organising, he performs decisional roles by allocating resources to

organizational units and makes way for coordinating these units.

In Directing, the manager performs interpersonal and informational roles by

interacting with his subordinates, leading motivating, and communicating with
them.

In Controlling, he shares informational roles.

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The Staffing function has not been included in the role approach though

managers at every level perform this function.

Thus, the functional approach of managerial jobs is more comprehensive as

compared to Mintzberg’s role approach.

Limitations of management

Management is not a pure science like the natural sciences. It is a social science.
Therefore its principles cannot be considered completely universal. The
predominance of the human element in management makes it an incomplete
science.

The following are the limitations of management:

(1) Managers are Actuated by Self-Interest:

Managers keep their personal interests first. After that, they look after the
interest of the institution and the society. They ignore social responsibilities in
the greed of high pay and positions, while they are expected to balance the
interests of all the parties to the enterprise.

(2) Management is related to Human Beings:

An important limitation of management is that it is concerned with human

beings. Therefore, it is related to different classes of people such as customers,
employees, business owners, government officials, etc., whose behaviour and
tendencies are different, because human behaviour is changeable, so
management behaviour is also variable.
(3) External Environment Affects the Management:

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The social, economic, and political environment also influences managerial

decisions in a significant way. Sometimes managers make them according to
them and sometimes they have to adapt to them.

(4) Incentive to Bureaucracy:

The fourth limitation of management is that under this the managers get the
work done by other people. For this, they have to build a bureaucratic setup. As
the size of the organization increases, the flaws of this bureaucracy get exposed.

(5) Lack of Proper Technique for Measuring Managerial Efficiency and

Effectiveness:

Although Peter F. Drucker definitely said that to test the efficiency and
effectiveness of management, it should be seen to what extent the managers
achieve the objectives of their organization. But there is no definite quantitative
technique available for this.
(6) Diversity in Organizational Objectives and Philosophies:

Although the principles of management are to a large extent universal, the

objectives and philosophies of each organization may differ. Each enterprise
can be seen to perform managerial actions according to its beliefs and ideas.

(7) Flexibility in the Principles of Management:

The main limitation of management is that its principles are not fixed. They are
dynamic, flexible. These can be changed according to the circumstances and
may have to be changed according to the nature of the organization.

Importance of Management in India

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The importance of management is massive in a developing country like India.

The reason is that the resources of the country are limited but the needs of the
population are huge and varied. In such cases,
only experienced and skilled managers can make the best and most economical
use of limited resources.

According to PL Tandon, the former chairman of the Hindustan Levers

Ltd. company- “We have seen that labour, capital, and raw materials do not lead
to development by themselves. For this, managerial knowledge is required from
which maximum results can be achieved. Where there is good management of
resources, good results have also been obtained there. 

According to Late Rajiv Gandhi - “India seeks to acquire the most modern
technical knowledge in the shortest possible time. Management is of utmost
importance in this direction today.

Economic development is being done in our country through five-year plans, a

large number of skilled managers are needed to achieve the goals of these plans.
Therefore, in India, "the lack of skilled managers in good quantity has been the
reason for inefficiency and delay in the implementation of plans."

Our government has invested billions of rupees in the public sector but due to
mismanagement, the desired results could not be achieved. Most of these are
being disinvested today. Thus the IAS Officers have proved to be incompetent
and unsuccessful in efficiently managing public undertakings, so in their place,
only efficient and qualified managers can run successful management of these
public undertakings.

There is a shortage of managers in India. England's management-employee ratio

is estimated at 1:12; In America, this ratio is 1:17, while in India it is 1:100.
Thus, India will need many managers in the future to meet the needs of its
economic development. Therefore, immediate effective steps have to be taken
to remove the shortage of managers.

A large part of the country's population is living below the poverty line,
economic life is dominated by inefficiency, corruption, low productivity, etc. In
such a situation, management is of utmost importance in India.

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In conclusion, we can say that if India has to make rapid economic

development, then managerial revolution has to be brought about and the
importance of management in economic development will have to be accepted.

Business environment and its interaction with management.

The environment of a business has a great impact on the functioning of the firm. It

offers opportunities and threats along with limitations and pressures influencing
the structure and functioning of the business. In order to understand the
relationship between an organization and its environment, we will look at the
interactions between them in some primary areas.

The Relationship between an Organization and its Environment

Exchanging Information
An organization and its environment exchange information between themselves.
Organizations need information about the external environment for planning,
decision-making and control purposes. Hence, they analyze the environment’s
variables along with studying their behavior and changes.

Further, the information generated by this analysis helps the organization handle
the problems of uncertainty and complexity of the business environment.
Therefore, firms try to gather information pertaining to market conditions,
economic activity, technological developments, demographic factors, socio-
political changes, competition activities, etc.

Also, the organization also transmits information to external agencies. It does so,

either voluntarily or inadvertently. Therefore, the exchange of information is an
important interaction between an organization and its environment forming the
basis of their relationship.

How Management Functions are Performed at Coca Cola

Planning

The vision of the Coca-Cola Corporation is to become the biggest and the best
anchor bottler in the world and its mission is to refresh everyone which guides
its management team in the planning process.
The top management of the company engages in formulating five year
longer term plans as well as shorter term planning for the next year or so.
The idea behind this type of planning is to have a strategic vision extending

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over a longer period as well as a flexible and adaptive strategy to change

according to the imperatives of its external environment.
Apart from this strategic planning, the top management at Coca-Cola also
engages in tactical planning in consultation with the middle management who in
turn acts on the feedback from the salespersons on the ground.
The planning at Coca-Cola entails setting targets for all employees at all levels
that are periodically reviewed for either success or failure in meeting the targets
and in case of the latter, feedback is sought from the mana gers and the
employees who have failed to meet the targets about the reasons for the same.
This is then incorporated into the decision making loop so that the next year’s
plan can address and redress the shortcomings as well as set new targets taking
into account these aspects.
An example of how planning at Coca-Cola works can be gauged from this
year’s target for the managers to increase sales by 20% over last year’s target
and increase the total customer based by 10%.
This is the micro level planning which is complemented by the macro level
planning which can be seen from the objectives of increasing market share
ranging from 5 to 30% for the middle management in the various markets in
which it operates. Further, there are operational goals which are set for the
salespersons on the ground and which are to do with the point of sale and the
other front end supply chain interfacing roles to actualize coordination and
cooperation among the partners, bottlers, vendors, and distributors.
Organizing

Coca-Cola follows the decentralization within centralization model of

organizing itself. This means that while the global headquarters retains its
overall decision making, the corporation is divided into regions and
geographical territories in which it operates. These regional divisions are then
organized into the functional departments which in its case comprise the
Production, Industrial Relations, Sales and Marketing, and Human Resources
departments.
The key to understanding the organizing function at Coca-Cola is to
recognize that employees with similar skills and common work functions
are grouped together. This helps the company avoid redundancies in problem
solving processes as well as bestowing a certain functional autonomy at all
levels.
Further, the organizing function at Coca-Cola follows the maxim of the span of
control not exceeding five direct reports which means that no employee has

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more than five others reporting to him or her. Having said that, it must be noted
that there is cross functional reporting as well which is in the case of the
managers and the functional heads reporting to the other divisional heads in
addition to the country heads.
Moreover, the managers at all levels are afforded a high degree of autonomy
which empowers them to decide according to the specific local needs.
Finally, the organizational structure is such that redundant layers in the
hierarchy are eliminated and the layers of direct and dotted line reporting ensure
that information flows through the organization without the clogging of the
organizational arteries due to bureaucratic mindsets as well as blockages due to
communication gaps.
The overall responsibility for each country or region is with the country or
regional head and the functional heads under him or her also report to the global
functional heads. Similarly, the responsibilities are clearly defined which means
that accountability is taken care of as is the aspect of transparency.
Leading

Though Coca-Cola is organized around geographical regions and then the

various departments for each region, the company emphasizes the importance of
transformative leadership at both the Global and the Local levels.
This means that local managers and the heads of departments in addition to the
Country Heads in the various markets that the company operates in are free to
decide on the appropriate strategies for their territories as long as they conform
to the global norms and global culture that permeates the organization. This
decentralization within centralization is the hallmark of the Glocal approach
which has been stated in the thesis.
Apart from this, the leadership at Coca-Cola believes in a democratic and
laissez faire approach to leading which is necessary considering the business
it is in which is heavily dependent on both the macro level vision and mission
that need to be translated and transformed into micro level execution.
Typically, the General Manager is at the top of the regional hierarchy who in
turn reports to the country head. These general managers have other managerial
subordinates such as the ones referenced for this article who have mentioned
how the organization practices behavioral leadership that is based on acting on
the specifics of the situation at the micro level.
The managerial styles of these managers also follow the incentive based system
for actualizing peak performance from the salespersons. In this system,

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monetary and non monetary incentives are provided to the salespersons to

motivate them and make them meet or even exceed their sales targets.
The monetary incentives include pay hikes, bonuses, and commissions based on
the sales achieved whereas the non-monetary incentives include vouchers for
vacations, travel, and discounted holiday packages for the employee and his or
her immediate family.
Controlling

The controlling function in Coca-Cola is done through periodic reviews of

managerial and salespersons performance. Towards this end, an appraisal
system based on objective evaluation of whether the employee being appraised
has met his or her targets forms the backbone of the controlling function in the
company.
Though managerial performance goes beyond evaluation of targets and their
compliance as the managers typically perform other roles such as people
management and strategic planning, the salespersons are appraised based on the
Sales Person’s reporting system and the Sales Person’s evaluation system.
The former tracks the activities of the salesperson on a daily basis whereas the
latter is done according to the appraisal cycle and the results of which are used
to determine promotions, bonuses, and other incentives. The evaluation period
is usually a year for sales managers whereas it is a quarterly cycle for the
market development roles, and a monthly cycle for the salespersons.
Apart from these performance measures, the employees are also evaluated
according to their contribution to the actualization of the overall goals of the
organization as well as on their soft skills including communication, people
management, coordination, and service quality.
Further, the controlling function also ensures that a performance development
plan is prepared which takes into account the salespersons meeting the targets
such as growth in sales, market development, and completion of customer and
partner calls including conversion of cold calling, attendance, and the
punctuality of the salesperson.
The key point to note about Coca-Cola’s controlling function is that it follows a
Glocal approach wherein the performance measures vary according to the local
conditions of the markets in which it operates.

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